While academic medical centers all over the country currently face challenging times, no area has been harder hit by managed care than California. The ruthless cost-cutting and competition for health care contracts dealt a severe blow to both public and private hospitals. While many physicians in that market are looking to relocate elsewhere, Gerald Levey recently returned from a top level position at Merck & Co. to helm the school of medicine at the University of California, Los Angeles. Prior to Merck, Levey was chairman of medicine at the University of Pittsburgh, president of the Association of Professors of Medicine, and a member of the Board of Governors of the American Board of Internal Medicine. Now, as other Los Angeles hospitals are on the brink of closure, Levey has the formidable task of directing the UCLA Medical Center into the future. Interviewed in his office in sunny southern California, Levey reflected on UCLA's strategy in a highly competitive market and the cloudy horizon facing academic centers in the United States.